LETTER FROM THE EXECUTIVE BOARD AN INDUSTRY-LEADING NETWORK

THE LSG GROUP - POSITIONING04 30A GLANCE AT THE OPERATIONS

MARKET ENVIRONMENT06 32CULINARY EXCELLENCE

PRODUCT PORTFOLIO08 34ENVIRONMENTAL MANAGEMENT

STRATEGIC TRANSFORMATION10 38PROVEN EXCELLENCE

COURSE OF BUSINESS18 40OUTLOOK

FINANCIAL PERFORMANCE20 42CONSOLIDATED INCOME STATEMENT

WORLDWIDE PRESENCE24 44KEY FIGURES 25 45 We look forward LETTER FROM THE EXECUTIVE BOARD to exploring with Dear reader,

Once again, we gratefully look back at another year of growth Significant steps have been taken in the transformation of the for our industry. Despite looming turbulence over the world‘s LSG Group. Today, we are able to offer a complete portfolio of you. economy, developments in our key areas of activities – air and products and services for a variety of industries. In the backend, rail travel, as well as convenience retail – were positive around we are changing our operational landscape to become even more the globe. This has certainly laid a solid foundation for the flexible through a market-oriented mix of production modules continued good performance achieved by our company. and tailored logistics. And, most importantly, the processes throughout our value chain are progressively growing in The relative stability of our environment has allowed us to focus consistency, leading to higher efficiency. on the improvement of our processes in terms of standardization, sharing of best practices and learning from each other. Thus, Moving forward, we will concentrate on taking advantage of in addition to a satisfying financial result, we have also attained the multiple opportunities offered by digitalization in creating a remarkable operational standard underlined by quality and new products and applications, facilitating our workflows and sustainability. interfaces and working together more seamlessly. This will be beneficial for our customers, employees and partners alike. Concurrently, a few 2018 milestones are evidence that we are constantly eager to successfully explore “the new,” widen our “Connecting Experts. Creating Experiences,” will continue to horizon and take our company to yet another level. We took be our claim for the foreseeable future. And in the spirit of our culinary expertise beyond the sky and into space with the those words, we would like to thank our employees in almost development of the “bonus food” for the commander and the 60 countries around the globe for their day-to-day commitment crew of the International Space Station’s “Horizons” mission. and enabling us to fulfill this promise while staying at the We positioned our onboard-retail team as the leading experts in forefront of our industry. the market by winning many new customers and successfully applying their know-how in working with five-star . Our sincere thanks also go to our customers and partners And last, but not least, a high customer retention rate in classic for their trust in us throughout the years. We would like to catering, as well as a number of recognitions are further encourage you to share any feedback that may help us to Jochen Müller Erdmann Rauer Dr. Kristin Neumann proof of our professionalism and dedication to engaging in further improve and excel. Chief Operating Officer Chief Executive Officer Chief Financial Officer long-term partnerships. In line with the dynamics of the marketplace, the LSG Group Today, the LSG Group’s brand portfolio delivers on three central 06 has significantly widened its product and service portfolio over objectives: providing clarity, leveraging synergies and building 07 the past decade in order to cater to the rising expectations of brand strength for the benefit of the company, its employees, consumers for holistic experiences. Serving this purpose, the customers and consumers. specialized teams from the LSG Group expert brands – LSG Sky Chefs, SPIRIANT, Retail inMotion and Evertaste – work hand- Without its own product line, the LSG Group supports the in-hand. Their different perspectives complement each other development of all business segments by acting as an integrator perfectly to develop tailor-made concepts that enhance the and pooling the competencies of its expert brands. It pushes wellbeing of both travelers and convenience-food consumers. sales leads to these brands and pulls service and product

ANNUAL REVIEW 2018 requests from them to create a combined customer offering While LSG Sky Chefs draws on more than 75 years of experience whenever needed. This message is summarized in the LSG in airline catering, SPIRIANT brings creativity and expertise in Group‘s tagline: the design and procurement of tableware, comfort items and LSG GROUP amenity kits to the table. The need of customers and consumers Connecting Experts. Creating Experiences. for comprehensive onboard offerings is fulfilled by Retail inMotion. For its part, Evertaste offers a rich variety of shelf- stable frozen, chilled and ambient packaged products. The LSG Group: and economicpolicies. jeopardized decide topursueprotectionist ifgovernments trade to comefrom Asia-Pacific.Thoseforecasts, however, couldbe 20 years.More thanhalfofthenewpassengersare expected number willalmostdoubleto8.2 billionairtravelersinlessthan AirTransportThe International Association(IATA) anticipates this of thegrowth trend prevalent duringthepastdecade. an increase of6percent overtheprevious yearandacontinuation In 2018,theworld’s airlines carriedarecord 4.3billionpassengers, represent byfarthebiggestcustomersegmentofLSGGroup. With ashare ofroughly 85percent oftotalrevenues, airlines to changesindemand are adapting Airline services classic andbrand-newcustomerconcepts. – andtheopportunitiesitcreatesconvenience retail forboth covered bytheLSGGroup –airandrailtravel,as well as This effortisbeing rewarded byongoinggrowth inallareas and constantlyevolvingexpectationsofconsumers. rethink theirbusinessmodelsinorder tosatisfythe heightened the globe.CompanieslikeLSGGroup, haveandwillagain affordable prices,havesignificantlyboostedmobility around with othersatanygivenpointintime,conjunction Seemingly unlimitedpossibilitiestomanageyourselfandconnect by digitalopportunities People’s desireformobilityisfacilitated

MARKET ENVIRONMENT

and efficiency. backend processes, thusallowingforgreater standardization frontend platforms.Atthesametime,digitalizationfacilitates be translatedintoattractiveindividualized offeringsviadigital to collectconsumerdataandbuild passengerprofiles that can essential enablersinthosedevelopments.Theyallowtheairline Employing digitaltechnologyandmarketingcapabilitiesare inflight-entertainment options. and beveragestoincludeboutiqueitems,virtualproducts and by a vast majorityofcustomers.Theofferinggoes beyond food which isproof thatgoodmerchandisers are sellingproducts desired at 93billionUSD.Thatismore thanfourtimeshigherin2010, the ancillaryrevenues ofthe entire airlineindustrywere estimated revenue asameanstofinance theirbusinessmodels.In2018, Low-cost carriershavehistoricallyfocusedongeneratingancillary traded againsttheirgoaltogrow theirancillaryrevenue. budgets foronboard servicesremain tightandare increasingly book, luxuryandculinarycreations. Atthesametime,airlines’ convenience andchoiceand,dependingontheclassthey travel experienceforpassengers.More thanever, flyerswant alike –willhavetofocusonbuildingandstrengthening the In theirfightformarketshare, airlines–networkandlow-cost at significantlylowercostthanthenetworkairlines. years ago.Today, there are some20ofthemofferingthisservice as of2018.Theyalsobegantoflylong-haul routes justafew new record highs,flyingmore than30percent oftheglobaltotal the world.Budgetcarrierscontinuetopushglobalairtraffic the emergence oflow-costairlines,whichhaveblossomedaround Moreover, theairlinelandscapehaschangedsignificantlysince

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LSG GROUP ANNUAL REVIEW 2018 that caneasilybetransported.Due totheincreasing number of life, andachangeinpackaging toward smallerconfigurations a stronger demandforpackedfresh foodwithalongershelf Four trends are driving theglobalgrowth. Urbanization creates changing todigitalformats. fast-food tofresh products andbusinessmodelsare increasingly and localplayers.Consumers‘demandisshiftingawayfrom perspective, itishighlyfragmentedandincludesglobal,regional The markethasthree key characteristics:from aprovider businesses) andAsia-Pacific(drivenbygrocery retailer sales). biggest marketsare inEurope (dominatedbycoffeeandbar at anaveragerateof3.5to4percent annually. Currently, the The globalconvenience-retail marketisexpectedtokeepgrowing and bars)are thesecond-largest LSGGroup customersegment. Convenience retailers (primarilyconveniencestores, coffeeshops from worldwidemegatrends Convenience retailersbenefit solutions andend-to-endITprocesses. of theirbusinessmodel,whichalsorequires holistic digital traveling experiences.Thishasdemandedatruetransformation and products rangingfrom simplesnackstofine dining and to aconsumer-oriented provider ofholisticcreative concepts have hadtoevolvefrom apure business-to-business supplier and serviceportfolio.To sumitup,overthepastdecadethey and applynewskills,fosterinnovationbroaden theirproduct Inflight-service providers are consequentlychallenged toacquire

model andcanmanagetheentire onboard servicevaluechain. positioning, grantflexibilityin the commercial andoperational experienced onboard-service partnersthatunderstand their their respective routes. Inorder todoso,they are lookingfor service toamore targeted foodandbeverageofferingon enables themtoswitchfrom astandard “allacross theboard” etc. Theirin-depthunderstandingoftheircustomers’profiles like flexibleticketchanges,digitalplatforms,convenientslots, on onboard serviceasone ofseveraldifferentiating factors Within thiscompetitiveenvironment, trainoperatorsare building travelling forpassengers. airlines andtrainoperators,whichhasalsofacilitatedseamless resulted inanincreased interconnection amongthenetworksof countries, andlegacyoneshaveextendedtheiroffers.Thishas have emerged, primarilyinWestern European andSouthern of themarketwasmadein2010.Sincethen,newtrainoperators travelers inEurope sincethefirststeptoward the liberalization Train rideshavebecomeanattractiveoptionover flyingfor emphasis ononboardservices European trainoperatorsputstronger promotes bothclick-and-collectandhomedelivery. relax. Last,butperhapsmostimportantly, our hyper-connectivity and nearbyshopsthatalsoofferpossibilitiestosocialize the growing late-lifersvaluetheconvenienceofonlineshopping products inhigherfrequency. Inourmulti-generationalsociety, smaller households,peopleare more prone toshopready-to-eat

The LSG Group offers a full range

PRODUCT PORTFOLIO of specialized products and services tailored to provide the best solutions for its customers The LSG Group is the leading provider of end-to-end within their particular industry: onboard products and services. airlines, train operators and 10 convenience retailers. 11 Beyond the four global brands (LSG Sky Chefs, Retail inMotion, SPIRIANT and Evertaste), there are also the regional brands SCIS ANNUAL REVIEW 2018 and Ringeltaube. Each of those

LSG GROUP businesses are present in their respective markets with unique competencies that when brought together support customers in creating holistic consumer experiences. Catering andHospitality LSG SkyChefs– crew training,aswellloungeandhospitalityservices. full-tray menus,premium diningonboard, last-milelogistics, It offerssolutionsforcomplete cateringprograms, including hospitality solutionsservingairline andtraincustomers. LSG SkyChefsistheexpertbrand forclassicculinaryand YEARS of cateringexperience

FLIGHTS per day thousand Serves more than

major pillarsofthisbusiness. comprehensive experienceinday-to-daylogisticsare thetwo more than75years.Itshighlevelofculinaryexcellence and The company’s proven expertiseinairlinecateringspans LOUNGES airline Manages

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LSG GROUP ANNUAL REVIEW 2018 procurement anddistribution ofexpertlydesignedonboard-retail for thetravelindustry. RiM’s offeringincludestheselection, customers withproprietary products, servicesandtechnology Retail inMotion(RiM)istheexpert brandservicingairlineandtrain Onboard Retail Retail inMotion– including 23newcustomerssince2017 Airline &train customers using RiMhandhelds Crews in revenue since2013 Annual sales revenues andstreamline onboard-retail programs. innovative proprietary software designedtomaximizeancillary and theend-to-endITsupport of thoseprograms through products, thecompletemanagementofbuy-on-board programs Growth inMotion‘s vPOS by AirlinesusingRetail is generatedeveryyear

Employees in 2013andstillgrowing compared to25employees using RiMtechnology Of allcommercial aircrafts

Equipment Solutions SPIRIANT – design anddeliveravarietyofproduct conceptsthatmeet the SPIRIANT hastheinsightandknowledge necessarytosource, trolleys andtrays. including crew andserviceitems,suchasgalleyequipment, kits andcomfortitemstoonboard essentialsforallclasses, portfolio ofproducts ranging from premium tableware, amenity services forairlineandtraincustomers.Itoffersacomplete SPIRIANT istheexpertbrandforequipmentandrelated logistics Ships approx. location across amenity kits countries in

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of-the-art, custom-designedIT systems. management ofinflight-catering equipment,supportedbystate- It offersoutsourcing andlogisticsexpertiseforthesupply-chain one oftheworld’s leadinglogisticsproviders, namedSkylogistiX. Additionally, SPIRIANThasajointventure withKühne+Nagel, “Where inspirationmeets performance,”reflects thisfact. contributing tobuildinguniquebrandstories.SPIRIANT’s tagline, specific operationalneedsofairlinesandtrainoperatorswhile E

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LSG GROUP ANNUAL REVIEW 2018 Packaged Products Evertaste – of ready-to-eat offeringsinanytemperature zone(frozen, chilled chains). Thepackaged-product rangecoversthefullspectrum the companyworksfor(airlines, trainsandconvenience-retail and foodcomponentsserving the three leadingindustries Evertaste istheexpertbrandfor packaged-product solutions pastries perday muffins and sweet

Has experts on itsteam brokerage andlicensing. needs andbrandvalues.Theoffering alsoincludesproduct meal componentscanbeindividually tailored tothecustomer’s The packagingdesignandassortment ofnutritionalsnacksand and ambient),from sandwichestoboxed-mealsolutions. Is present at locations countries in solutions, duty-free andcash-managementservices. personnel screening, in-flightentertainmentandpoint-of-sales include theairportoperationsarea, aircraft andcargo security, the companyhasexpandedits range ofproducts andservices to airline-catering security. Ascustomerrequirements haveevolved, SCIS AirSecurityisrecognized intheU.S.asleader Security Services SCIS AirSecurity– employees offices located in International Airlines International Domestic every day SCIS isabletoprotect thebrandofover major USairports, inover and 17 16

LSG GROUP ANNUAL REVIEW 2018 outlets retail offering

products lifestyle aviation gourmet foodsexclusivelytoairport andairlineemployees. perfumes, cosmetics,apparel, travelaccessoriesand Germany offeringanextensive assortmentofbeverages, The Ringeltaubeshopscanbe found atmajorairportsin Retail Shops Ringeltaube –

The LSGGroup isproactively reshaping itsbusinessmodel. STRATEGIC TRANSFORMATION by additionaloffersavailablefor purchase bythepassenger. will holditsleadforlong-haulflights, butwillbesupplemented The conceptcertainlyalsoconsiders thefactthatclassiccatering airports thanare currently beingserved. flexibility bydeliveringtoanevenlarger numberofEuropean fewer fixedassets,likewholly-ownedunits,andallowforgreater reach of450kilometerson average.Thisconfigurationwillinclude delivery andwillbesuppliedbyregional production centerswitha according tothefunctions necessaryintermsoftheirproximity to demand ateachairport.Therefore, airportfacilitieswillbereduced operational modelsthatare networkedandtailored tocustomer network there willbemore asset-lightandconsistofdifferent now redesigning itsproduction landscapeinEurope. Thefuture central production anda new logisticsnetwork,thecompanyis Following thesuccessfulcompletionofapilotproject thatincluded catering activities. began tointroduce anewoperatingmodelforitsclassicairline- airports. Asaresult ofthesedevelopments,in2017theLSGGroup or evenobsoleteinsomeplaces,especiallyatEuropean non-hub flights, classic-cateringoperationsare becomingunderutilized as theserviceconceptforairlinesonshort-andmedium-haul is ontherise.Duetofactthatonboard retail will likelyprevail Demand forclassicairlinecateringisfallingwhileonboard retail retail market. travel industryandasagrowing supplierfortheconvenience- leading provider ofend-to-endproducts andservices forthe Group hastakensignificantstepstomaintainitspositionasthe In response toitshighlydynamicmarketenvironment, theLSG

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LSG GROUP ANNUAL REVIEW 2018 Latin America.Additionally, thankstothesimilarities between a numberofpromising businessopportunitiesinAsia,Africa and experts ispreparing astrategicentryintonewmarketsthrough these activities.Today, aglobalcommunityofconvenience-retail convenience-retail market,theLSGGroup hasstartedtoglobalize know-how andastrong footprint intheNorthAmerican Based onitslongstandingculinaryexpertise,profound logistics chain andenhancethepassengertravelexperience. digital solutionsaimingtoensure asmoothonboard-retail supply They workandnetworkinastart-upenvironment, developing most ofthemdigitalnatives,representing 25nationalities. UAE, overthepasttwoyears.Itcurrently employs250people, opened officesinDallas,USA,SaoPaulo,Brazil,andAbuDhabi, carriers. Inorder toensure marketproximity, RetailinMotion customer base,includinglow-costaswellpremium network Ireland, headquarters,ithasestablishedatrulyinternational and hasgrown significantlyeversince.Steered from itsDublin, of closecooperation,thecompanywasfullyacquired in2016 programs through itsRetailinMotionexpertteam. After three years as theleadingprovider ofholisticonboard-retail management At thesametime,LSGGroup hasbeenabletopositionitself service ameanstodifferentiate andstrengthen theirbrand. the requirements ofthesenetworkcarriersthatconsider onboard A highlevelofculinaryexcellenceremains crucialinorder tomeet depending ontheircustomerstructure andserviceconcepts. anything from premium servicetobreakfast granolabars, new production andlogisticsnetwork,mustbeabletodeliver carriers.Thehubunits, which areinternational alsopartsofthe with passengervolumesandnewroutes establishedbymultiple Additionally, demandathubairportscontinuestogrow inline diverse personalbackgrounds andskills. mix ofcorporateinsight,experiencefrom otherindustriesand Functions. Thecompositionofthesebodiesrepresents astrong Product andServiceDevelopment andOperations-Value-Chain of theRegionsandDivisionsSalesMarketing, Committee, consistingoftheExecutiveBoard andtheHeads and withthecompanysince2003)aGroup Development Officer (COOandExecutiveBoard membersinceMarch 2005 company sinceJuly2014)andJochenMüllerasChiefOperating Dr. KristinNeumannasChiefFinancialOfficer(CFOandwiththe since October2014andwiththecompany2006), that includesErdmann RauerasChiefExecutiveOfficer(CEO The LSGGroup ismanagedbyathree-member Executive Board multiple locations. an importantdifferentiator forcustomersthatare servedat speed tomarket.Theywillalsoenhanceconsistency, whichis for digitalization.Theseeffortswillleadtomore efficiency and and optimizationofitsprocesses onaglobalscaleasprerequisite degree, thecompanyhasfurtherintensifiedstandardization applications. Inorder toexploitthemthelargest possible interfaces,aswellfront andexternal backend internal levels, includingoperationalandadministrativeprocesses, new opportunitiesoffered through digitalizationatmultiple Those transformationactivitiesare supportedanddrivenbythe pursuing growth opportunitiesintheEuropean train market. business,thecompanyis the airlineandtrainonboard-service still servesalarge customers. numberof importantinternational Chefs hasremained present atthosetwomajorairports,where it mutually acceptablefinancial conditions. Nevertheless,LSGSky summer becausethecompanies were notabletoagree upon South Korea, andAlitaliainRome,Italy)cametoanendduring However, twoimportanthubcontracts(withAsianainSeoul, and medium-haulflights. the introduction ofanewserviceconceptfortheairline’s short- at theirhomebaseinLisbon,Portugal,wasrenewed alongside the carrier. InEurope, thecateringagreement withTAP Portugal extended, buildingonmore than30yearsofpartnershipwith catering contractwithCathayDragoninHongKongwasalso throughout theworld.On theothersideofglobe,hub- the contractwithDeltaAirLinesat36locationsineightcountries with AmericanAirlinesinNorthAmerica,andtheprolongation of of amulti-citycontractandtheacquisitionadditionallocations including anewoneinAmsterdam, theNetherlands,retention catering contractwithUnitedAirlinesin24locationsworldwide, major airlinecustomers.Amongthemare theextensionof Extensive agreements were renewed withsomeofthecompany’s highly competitivemarket Proactive businessdecisionsina Airline Catering: opportunities, strengthened existing relationships andextendedopportunities, In 2018,theLSGGroup againpursuednewbusiness

its rich network of partnerships. its richnetworkofpartnerships.

COURSE OFBUSINESS

Americas, respectively. Aires, Argentina, Bronze assecondandthird bestunitsinthe facility in Europe, ,, SilverandBuenos catering quality achievements:Brussels,Belgium,wonGoldasbest with theprestigious QSAI ExcellenceAwards fortheiroutstanding Three LSGSkyChefsairline-catering facilitieswere recognized from theHannoverhub-production unit. in Hamburg significantly reduced withfoodnowbeingsupplied The facilityinLeipzigwasclosedthespring,andoperations and packedinBrussels,Belgium,shuttledtoAmsterdam. in-flight service(meals,equipmentandduty-free goods)produced airport from anonsitedelivery-only facilitywiththecomplete LSG SkyChefsbegantoservetheAmsterdam, theNetherlands, extended. Additionally, theexistingpartnershipinLuanda,Angola,was growth airportthere. beingenjoyedbythenewinternational company beganoperatingabrand-newfacilityinlightofthestrong company. Together withtheWenzhou AirportGroup, China,the between LSGSkyChefsandThingsRemembered, alocalcatering A newfacilityopenedinLagos,Nigeria,basedonajointventure The company’s network againunderwentsignificantchanges. 21 20

LSG GROUP ANNUAL REVIEW 2018 Retail inMotion’s product portfolio. of airlinesintermssize,cost andqualityare now part of meals specificallyforthetravel industrywhichfitthedemands with ItalianfoodcompanyBarilla todesignambientpasta The LSGGroup’s CulinaryExcellenceTeam alsopartnered products getlistedonthe airline’s menu. validation period,afterwhichajurydecideswhetherornotthe to passengersonboard flightsduringathree-month- bring newproducts andfood solutionsfrom start-upcompanies NX-FOOD, aninnovation-drivinghubofMETRO.Theyseekto collaboration withitslongstandingcustomerEurowings and In thesummerof2018,RetailinMotionentered intoanew Duty-Free Program. developing andmanagingtheairline’s market-leadingBoutique .SinceearlyNovember, RetailinMotionhasbeen they were selectedastheonboard-retail partneroffive-star The company’s proven trackrecord gotasignificantboostwhen the airline’s entire crew. program, refresh theirtechnicalsolutionandintroduce iPadsfor with SpiritAirlinestomanagetheirfully-outsourced onboard-retail airline’s flightsfrom Geneva,andtheextensionofapartnership of thenewSWISS“Saveurs”onboard-ordering concept forthe Milestones oftheyearincludedevelopmentandmanagement around theglobe. has attractedmore than40airlineandtraincustomersfrom post-ordering capabilities. Sofar, thecompany’s innovativespirit management, product andsuppliermanagementpre- and inflight-entertainment systems,flight-schedule with integration These include passenger- andcrew-facing mobileapps, modules, functionalityandintegrationpoints. experience fortheirpassengers.Itfeatures anewsuiteof to fullydigitizeandconnecteverytouchpointofthetravel airline industrywasrevamped andexpandedtoenableairlines story. Thecompany’s end-to-enddigitalretail platformforthe The yearsawthenextchapterinRetailinMotionsuccess Retail inMotionadvancestopoleposition Onboard Retail:

of aholisticdiningexperience. Culinary Excellenceteam,thustakingintoaccounteveryaspect that wasdevelopedinclosecooperationwiththeLSGGroup’s collections. Onehighlightistheculinarysynergy collection complemented itswideofferingwithnewglassware andcutlery across allofitsproduct categories.Thecompany has also emphasis onusingrecyclable, recycled ornatural materials working onexpandingtheSPIRIANTproduct portfoliowithan In parallel,theircreative in-housedesignteamisconstantly tableware. ,coveringgalleyequipmentandEconomy-Class comprising almostallofitsonboard equipment,andwith Class. Theywere alsoabletoextendtheircontractwithFinnair, and awholerangeofluxurycomfortitemsforQantas’First new tableware forLATAM, amenitykitsforHongKongAirlines experts created atray-lessservingconceptforEmirates, proof ofSPIRIANT’s industrystanding.Theonboard-equipment Major businesswinswithcarriersfrom around theglobeare exists fortheseproducts worldwide. and experiencesinorder toexploittherichmarketpotential that approach tobundlingtheLSGGroup’s expertise, bestpractices The Evertasteteamisnowlookingtodevelopastructured America. ButEvertastebrought italltogether. convenience-retail business wasalmostentirely limitedtoNorth sold toairlinesandtrainoperatorsonaglobalscale,whereas the retailers, airlinesandtrains. Theseproducts were already being of frozen, chilledandambient packagedproducts forconvenience LSG Group underlinedits commitmenttofurtherexpandinthearea With thelaunchofEvertastebrandinspring2018, Evertaste aimsatglobalexpansion Packaged Products: SPIRIANT enhancesitsproductportfolio Onboard Equipment:

meals train passenger per year

trains per day Serving Bahn, Eurostar, Thalys,TGVLyria andTGVFrance-Italie. customer portfolioincludedComboios dePortugal,Deutsche and onboard sales.Attheendofbusinessyear, thetrain about customer-specific catering,logistics, crew management included foodsampling,equipment solutionsandcasestudies approach toworkingwithtrainoperators.Thepresentation trade fair, theLSGGroup presented itsintegratedservice At Innotrans2018,theworld’s leadingtransportationtechnology focus onfresh regional items. the Portuguesestate-ownedrailwaycompany, withastrong kicked offaninnovativeserviceconceptforComboiosdePortuga l, loading ofthetrains.InDecember, thecompany’s trainteam Services includeonboard catering,crew managementandthe TGV France-Italie,asubsidiaryoftheFrench SNCFGroup. The year2018startedwiththelaunchoftailor-made servicesfor increasingly appliedincollaboratingwithtrainoperatorsEurope. The company’s vastexperienceinairlinecateringhasbeen Pulling expertise toenternewmarkets Train Services:

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LSG GROUP ANNUAL REVIEW 2018 and theU.S.foralmost9.2million guestsayear. In total,theteammanages54lounges inGermany, Switzerland ground. brand positioningbyextending the passengerexperienceon Beyond theauthenticityofmeals,aimistosupportairline’s in NewYork andtheSakuraFirstClassLoungesinFrankfurt. of itspartnershipwithJapanAirlinesbyservingtheirloungeguests lounge atitsFrankfurthub.Theyearalsomarkedthebeginning Senator andBusinessClassloungestheairline’s welcome the almosteightmillionpassengersthatpatronize ’s review, itintroduced aninnovativepremium-service conceptfor Senator andBusinessClassairlinelounges.Duringtheyearunder The company’s lounge teamconcentratesonmanagingFirst, Lounges: Hospitalityatapremiumlevel of Haribo gummies are eatenintheFrankfurt lounges peryear

bottles ofbeer are eatenintheGermanloungesperyear pretzels (Brezeln) containing are servedinthelounges Lounge teamperyear managed bytheLSG liters FINANCIAL PERFORMANCE

Earnings situation shows significant improvements.

The LSG Group’s revenue development in 2018 remained at the Depreciation and amortization sank by EUR 19 million to EUR previous year’s level despite the negative influence of foreign 71 million. This can mostly be attributed to lower extraordinary exchange rates and the expired catering contracts with Asiana depreciation in Europe. Other operating expenses dropped Airlines (June 2018) and (September 2018) at their by EUR 21 million to EUR 540 million. Major reasons for this respective hubs in Seoul, South Korea, and Rome, Italy. Significant development are the positive effect of exchange rates and growth was achieved in North America and in the onboard-retail decreased allowances for bad debts for trade receivables. business segment on a global scale. Total operating expenses, therefore, amounted to EUR 3,213 Revenues declined very slightly by 0.1 percent to EUR 3,217 million, EUR 53 million less than in 2017. million. Adjusted for currency-related factors, the revenue growth was 4.3 percent. Changes in the group of consolidated businesses Profit from operating activities increased significantly from EUR 13 contributed to a growth in sales of EUR 22 million. Other operating million to EUR 82 million, influenced by both a higher operating income rose by 27.4 percent to EUR 78 million, mainly due to income and lower operating expenses. The investment result of higher capital gains and the release of accruals. EUR 29 million is roughly 10 percent below the previous year, due to special effects in 2017. Major contributions to this result As a consequence, total operating income increased slightly by come from the company’s partnerships in Russia, Latin America / 0.4 percent to EUR 3,295 million. The Caribbean, China, the UK and Portugal.

The cost of materials and services decreased by EUR 11 million Consequently, the EBIT (Earnings Before Interest and Taxes) to EUR 1,385 million as a result of the positive influence of the improved significantly by EUR 65 million to EUR 110 million. foreign exchange. The cost of materials ratio went down by 0.4 Due to extraordinary depreciation on fixed assets, it is EUR percentage points to 43.0 percent. 5 million below the Adjusted EBIT, which also increased significantly to EUR 115 million. The average number of employees rose slightly by 1.2 percent to 35,548. The impact of the market withdrawal in Scandinavia in 2016 The LSG Group achieved a good result. Despite the transformation and the continued transformation in Europe was compensated by costs in Europe, it was able to create a positive EACC (Earnings hiring employees in North America, Latin America and the Emerging after Costs of Capital), which means it created company value. Markets, thanks to the positive development of the business in those regions. In total, staff costs declined slightly by 0.2 percentage points to EUR 1,218 million.

NORTH AMERICA CANADA Calgary (YYC) Hamilton (YHM) London (YXU) Toronto (YYZ) Vancouver (YVR) UNITED STATES Anchorage (ANC) Atlanta (ATL) Austin (AUS) Baltimore (BWI) Boston (BOS) Burbank (BUR) Charlotte (CLT) Chicago (ORD) Dallas Love Field (DAL) Dallas-Ft. Worth (DFW) Denver (DEN) Detroit (DTW) Fort Lauderdale (FLL) Fort Myers (RSW) Houston (IAH) Las Vegas (LAS) Los Angeles (LAX) Miami (MIA) Minneapolis (MSP) New York - JFK (JFK) New York - La Guardia (LGA) Oakland (OAK) Ontario (ONT) Orlando (MCO) Philadelphia (PHL) Phoenix (PHX) Pittsburgh (PIT) Portland (PDX) Raleigh-Durham (RDU) Sacramento (SMF) Salt Lake City (SLC) San Diego (SAN) San Francisco (SFO) San Jose (SJC) Santa Ana (SNA) Seattle (SEA) Tampa (TPA) Washington - International (IAD) Washington - National (DCA)

LATIN AMERICA ANTIGUA & BARBUDA Antigua (ANU) ARGENTINA (EZE) BARBADOS Barbados (BGI) BERMUDA (UK TERRITORY) Bermuda (BDA) BRAZIL Belém (BEL) Campinas (CPQ) Fortaleza (FOR) Natal (NAT) Recife (REC) - International (GIG) Rio de Janeiro - Santos Dumont (SDU) Salvador (SSA) Sao Paulo (GRU) CAYMAN ISLANDS (UK TERRITORY) Grand Cayman (GCM) CHILE Santiago de Chile (SCL) COLOMBIA Bogotá (BOG) COSTA RICA San Jose (SJO) ECUADOR Guayaquil (GYE) Quito (UIO) EL SALVADOR San Salvador (SAL) GRENADA Grenada (GND) GUATEMALA Guatemala City (GUA) HONDURAS San Pedro Sula (SAP) JAMAICA Kingston (KIN) Montego Bay (MBJ) MEXICO Bajio (BJX) Cancún (CUN) Guadalajara (GDL) Mexicali (MXL) Mexico City (MEX) Monterrey (MTY) Puerto Vallarta (PVR) San José del Cabo (SJD) Tijuana (TIJ) NETHERLANDS ANTILLES Bonaire (BON) Curacao (CUR) St. Maarten (SXM) PANAMA Panama City (PTY) PARAGUAY Asunción (ASU) ST. LUCIA St. Lucia (UVF) TRINIDAD & TOBAGO Port of Spain (POS) Tobago (TAB) URUGUAY (MVD) VENEZUELA Caracas (CCS) Isla Margarita (PMV) VIRGIN ISLANDS (US TERRITORY) St. Thomas (STT)

EUROPE/MIDDLE EAST/AFRICA ANGOLA Luanda (LAD) BELGIUM Brussels (BRU) BULGARIA Sofia (SOF) CZECH REPUBLIC Bor EGYPT Cairo (CAI) ESTONIA Tallinn (TLL) FINLAND Helsinki (HEL) FRANCE Paris (CDG) Paris - Gare de Lyon Rail Station (PAR) GERMANY Alzey (XZY) Berlin - Schoenefeld (SXF) Berlin - Tegel (TXL) Bremen (BRE) Cologne (CGN) Dortmund (DTM) Dusseldorf (DUS) (FRA) Hamburg (HAM) Hanover (HAJ) Leipzig (LEJ) Munich (MUC) Muenster-Osnabrueck (FMO) Paderborn (PAD) Stuttgart (STR) Weeze (NRN) IRELAND Dublin (DUB) ITALY Bergamo (BGY) Milan - Malpensa (MXP) Rome (FCO) Rome Campiano (CIA) LATVIA Riga (RIX) KENYA Nairobi (NBO) NETHERLANDS Amsterdam (AMS) NIGERIA Lagos (LOS) PORTUGAL Lisbon (LIS) RUSSIA Chelyabinsk (CEK) Krasnoyarsk (KJA) Moscow - Domodedovo (DME) Moscow - Sheremetyevo (SVO) Novosibirsk (OVB) Rostov-on- Don (ROV) Simferopol (SIP) Sochi (AER) St. Petersburg (LED) Ufa (UFA) Vladivostok (VVO) SOUTH AFRICA Cape Town (CPT) Durban (DUR) Johannesburg (JNB) SPAIN Palma de Mallorca (PMI) SWITZERLAND Geneva (GVA) Zurich (ZRH) TANZANIA Dar es Salaam (DAR) TURKEY Antalya (AYT) Bodrum (BJV) Dalaman (DLM) Istanbul - Sefaköy (IST) Izmir (ADB) UNITED ARAB Abu Dhabi (AUH) Dubai (DUB) UNITED KINGDOM Aberdeen (ABZ) Belfast (BFS) Birmingham (BHX) Bristol (BRS) Cardiff (CWL) Doncaster (DSA) Durham Tees Valley (MME) East Midlands (EMA) Edinburgh (EDI) Exeter (EXT) Glasgow (GLA) Humberside (HUY) Leeds/Bradford (LBA) Liverpool (LPL) London - Gatwick (LGW) London - Heathrow (LHR) London-Stansted (STN) Luton (LTN) Manchester (MAN) Newcastle (NCL) Norwich (NWI) Prestwick (PIK)

ASIA /PACIFIC CHINA Beijing (PEK) Chengdu (CTU) Guangzhou (CAN) Hangzhou (HGH) Hefei (HFE) Hong Kong (HKG) Kunming (KMG) Lanzhou (LHW) Lijiang (LJG) Nanchang (KHN) Nanjing (NKG) Qingdao (TAO) Sanya (SYX) Shanghai - Hongqiao (SHA Shanghai - Pudong (PVG) Shangri-La (DIG) Urumqi (URC) Wenzhou (WNZ) Xian (XIY) COOK ISLANDS Rarotonga (RAR) INDIA Bangalore (BLR) Hyderabad (HYD) JAPAN Fukuoka (FUK) Tokyo - Haneda (HND) Tokyo - Narita (NRT) Osaka-Kansai (KIX) MALAYSIA Kuala Lumpur (KUL) MICRONESIA Guam (GUM) Saipan (SPN) MYANMAR Yangon (RGN) NEPAL Kathmandu (KTM) NEW ZEALAND Auckland (AKL) Christchurch (CHC) Queenstown (ZQN) Wellington (WLG) SOUTH KOREA Busan (PUS) Seoul - Gimpo (GMP) Seoul - Incheon (ICN) THAILAND Bangkok - Donmuang (DMK) Bangkok - Suvarnabhumi (BKK) Bangkok U-Tapao (UTP) Russia: Latin America/the Caribbean: United Kingdom: Aeromar, the 51/49 joint venture with The partnership with Goddard Alpha LSG Limited – In 2012, the LSG Russian carrier was established Enterprises was founded in 1995 with Group and Alpha Flight Group joined as early as 1989 at the Moscow- an LSG shareholding of 49 percent. forces in the highly competitive UK AN INDUSTRY-LEADING NETWORK Sheremetyevo airport and has continued Recently, it was extended until 2035, market. Today, they are present at 22 to grow to become the number-one which is testament to the mutual trust airports: Aberdeen, Belfast, Birmingham, caterer in Russia with locations in Rostov upon which this successful cooperation Bristol, Cardiff, Doncaster, Durham on Don, Sheremetyevo, Simferopol, is built. The alliance covers 17 countries Tees Valley, East Midlands, Edinburgh, Sochi, St. Petersburg, Ufa and in Latin America and the Caribbean Exeter, Glasgow, Humberside, Leeds- Where experience meets market know-how. Vladivostok. In 2012, the LSG Group also with a total of 25 locations in Antigua, Bradford, Liverpool, London Heathrow, entered into a partnership with Novaport, Barbados, Bermuda, Cayman Islands, London Gatwick, London Stansted, a Russian airport operator with locations Colombia, Ecuador, El Salvador, Luton, Manchester, Newcastle, Norwich, in Novosibirsk and Chelyabinsk. Grenada, Guatemala, Honduras Jamaica, Preswick. Netherlands Antilles, Paraguay, St. Lucia, China: Trinidad and Tobago, Uruguay, Venezuela Canada: The LSG Group’s first entry into an untapped market Between 1990 and 2014, the LSG Group and the U.S. Virgin Islands. Additionally, CLS Catering, a joint venture with successfully engaged with major Chinese the LSG Group has wholly-owned Catering Services, dates dates back to the early days of 1978, when economic airlines, authorities and local partners locations in Argentina, Brazil, Chile, back to 1994. Today, the LSG Group 29 through 13 joint ventures operating at 18 Panama and Venezuela. holds 70 percent of the partnership, liberalization and openness to foreign investment was still 30 airports: Beijing, Chengdu, Guangzhou, which is present in Calgary, Hamilton, Hangzhou, Hefei, Hong Kong, Kunming, Mexico: London, Toronto, Vancouver and caters new in many parts of the world. That year, LSG Sky Chefs Lanzhou, Lijiang, Nanchang, Nanjing, The joint venture Aerococina de Mexico to both airlines and convenience-retail Sanya, Shanghai-Hongqiao, Shanghai- was established in 1997, and currently customers. formed a joint venture with Egypt Air in Cairo, Egypt, Pudong, Shangri-La, Urumqi, Wenzhou the LSG Group holds 51 percent of the and Xian. shares. It is present in Bajío, Cancun, where this liberalization was just taking effect. Since Guadalajara, Mexicali, Mexico City,

ANNUAL REVIEW 2018 Monterrey, Puerto Vallarta, San Jose del then, the relationship has remained stable and trusting Cabo and Tijuana. over the span of four eventful decades. This example of LSG GROUP entrepreneurship has always been part of the LSG Group’s DNA. Its extensive network of partnerships combines an industry leader’s expertise and skill with local and regional Additional, mutually beneficial partnerships with airlines, national entrepreneurs and airport authorities exist in Angola, Bulgaria, Egypt, Japan, Kenya, Nepal, Nigeria, Portugal, South Korea, Switzerland, Tanzania and Thailand. While the LSG Group benefits from the local market know-how brought to the table by its diverse know-how and market access of its partners, these companies gain access to a rich source of expertise in important areas, such as operations, quality and technology, as well as research and development. In addition to these geographic partnerships, the LSG Group partners. Major partnerships that cover multiple locations works with experts in the areas of logistics and nominated products.

span the globe: In 2018, non-consolidated revenues from the Group’s partnerships amounted to EUR 1.4 billion. 99.9% A GLANCE AT THE OPERATIONS

Operational Excellence around the clock All-encompassing policy underlines steadfast commitment 31 The year under review was also a standout from an operational 32 performance perspective. In 2018, the company served 4.5 The LSG Group bases its long-term business success on million flights from its more than 200 customer service centers operations compliance and quality, which are major pillars of its (CSCs), most of which operate 24 hours a day, 365 days a year. unique selling proposition. In doing so, the company pursues Punctuality was measured at a rate of 99.9 percent on-time two goals: meeting and exceeding customers’ expectations by performance. Taking into consideration constantly changing delivering high-quality products and services while caring for its weather conditions, frequent aircraft changes and the operational employees. instability of the aviation industry throughout 2018, this is a truly

ANNUAL REVIEW 2018 remarkable achievement. The company’s Operations Compliance and Quality Policy lays out this steadfast commitment. It is a holistic approach covering the areas of product and service quality, food safety, special customer requirements, security, occupational safety and the LSG GROUP Global communities working environment. toward common goals The commitment highlights three areas. Compliance with all 4.5Mio In order to live up to its promise of operational excellence, the regulatory requirements, a strong customer focus as an essential LSG Sky Chefs operations employees work together in internal prerequisite to protect their interest at all times and continuous communities that have a global reach and labor together improvement measures as core elements of the company’s toward a common goal. A leading example is the LPS (LSG strategy. It was updated in 2018 and signed by the members of Sky Chefs Production System) community, which drives the the LSG Group Executive Board. company’s industry-leading Lean process optimization through workshops, virtual connections and best-practice sharing. The same approach is increasingly being applied in all aspects of >200 the operations value chain. SPOTLIGHT ON CULINARY EXCELLENCE

Taking Culinary Excellence into Space certain amount of “bonus food” which is specifically developed to their individual preferences. The consumption of the bonus In 2018, the LSG Group’s Culinary Excellence Team took the food onboard the ISS is an important team event that fosters company’s expertise to an even higher level: space. The team morale and spirit during the astronauts’ challenging stay in developed the so-called “bonus food” for Alexander Gerst, space by offering them a little “taste of home.” a European Space Agency (ESA) astronaut and International Space Station’s (ISS) Horizons mission commander from June Special nutritional requirements, highest specifications regarding to December 2018. sterilization and shelf-life (at least two years) and the fact that the food is consumed at zero gravity needed to be considered Bonus food plays an important role in the astronauts’ physical during the development of these meals while also maintaining and psychological wellbeing during their typically six-month stay the authenticity and taste of the recipes. The lessons from this onboard the ISS. While their day-to-day meals are a selection special project will add long-lasting value to future culinary * Some of the “bonus food” the LSG Group provided from a standard food catalogue, they can bring with them a developments within the LSG Group. for the ISS crew during the 2018 Horizons mission company’s culinaryexpertise. further developingandenhancing the eventually beimportantinfluencers in flyers. Thenewlymintedgraduates will millennials, leisure travelersandfrequent (people 60-years-oldandolder), four demographics:TheSilverSociety tasked withcreating dishes foroneof ingredients, the13candidates were Armed withthesamestandard setof Culinary ExcellenceAcademyFinale. had theirgraduationduringtheGlobal the comprehensive two-year course In 2018,thefirstclasstocomplete gamificationandnetworking. eLearning, community. Itprovides lifetraining, that wasdevelopedbyitsglobalChef company’s chefsandpotential proprietary trainingcurriculumforthe The LSGGroup CulinaryAcademyisa Learning foralifetime 36 35

LSG GROUP ANNUAL REVIEW 2018 shoulder” during a series of dinner events. shoulder” duringaseriesofdinner events. company to“lookoverthestar chef‘s a numberofhisfellowchefsfrom the star chef,SvenElverfeldwhoinvited Chefs apprentice, andnowalsoathree- collaboration withtheformerLSGSky The LSGGroup hasalso developed a tailor-made premium offering. Onboard RetailExpoinApril 2019andits the upcomingWorld Travel Cateringand Global CulinaryExcellenceAcademy, to workonseveralevents,includingits star ratingbytheMichelinGuide,inorder finest inEurope athree- havingearned be thebestGermanchefandoneof Harald Wohlfahrt, generallyconsidered to In 2018,itentered intoapartnershipwith knowledge exchangeandtraining. These partnershipspromote culinary cooperating withrenowned starchefs. airline-catering offer, theLSGGroup is trends andincorporatethemintoits influence bothlocalandglobalfood In itsconstantefforttoforesee and Cooking withthestars management hasbeeninplaceformore thantwodecades, and itseeksto continuouslyimprove thebalance between The LSGGroup’s systematic approach to environmental business needsandenvironmental care. FOCUS ONENVIRONMENTAL MANAGEMENT prepared fordeployment.Here are justafewexamples. service developmenttoadministration.Oncetested,theyare cover allareas ofthecompany, from operations,product and practices andgreat ideas are beingcontinuouslyshared. Those scope ofactivityandlegalrequirements. Ontheotherhand,best from locationtodepending onlocalinfrastructure, and waterconsumption.Thetarget figures maycertainlyvary indicators are regularly monitored. Thoseincludewaste,energy On theonehand,asetofannuallyagreed onkeyperformance 38 37

LSG GROUP ANNUAL REVIEW 2018

The ongoing introduction of paperless operations by equipping the production facilities with tablets and standard software to replace the current paper-based production processes and checks.

As an alternative to the widely-used diesel engines, hybrid drives and compressed natural gas and electricity are being evaluated as potential fuels for the company’s future fleet.

Paperless production

In its effort to run its facilities more efficiently and reduce electricity consumption, multiple measures are being put into place. Those include LED lighting in buildings all over the world, evaluation of waste-management alternatives and the introduction of asset-management software. Alternative engines

Smart buildings

In an effort to replace environment- clogging plastic equipment, recyclable and natural materials such as grass are being tested for the design of meal boxes and potentially additional items.

Paperless onboard: This app for airline crews shows the location of all goods in the galleys, allowing for a quicker and smoother service workflow while saving huge amounts of paper.

New materials

A set of new apps for airline passengers and crew alike will lead to the customer-oriented loading of the aircraft, thus reducing waste while catering to individual preferences.

Paperless onboard

Pre-Ordering apps

PROVEN EXCELLENCE

2017 QSAI Award of Excellence Delta - Caterer of the Year – Hub Facility Philippines Airlines - Silver Our global network delivers consistent service quality and for Europe, the Middle East & Africa New York City, USA Prize for Catering “Gold Medal“ Delta - Caterer of the Year Cosmo (Japan) culinary excellence worldwide. Our customers acknowledge our Brussels, Belgium Rome, Italy - Best Network 20172017 QSAI Award of Excellence iF Design Award (Premium Étagère) Caterer commitment to excellence through their loyalty and the awards for the Americas “Silver Medal“ SPIRIANT Cosmo Narita, Japan Santiago de Chile - International Suvarnabhumi Airport - they bestow upon us, such as: 2017 QSA I Award of Excellence Kitchen of the Year 2017 Certificate of Appreciation for the Americas “Bronze Medal“ Narita, Japan Bangkok, Thailand Buenos Aires, Argentina - Silver Award, - Top Performance & - Best Service 2017 Award Caterer of the Year 2017 (Tier 1) Handling, Bronze Award Frankfurt, Germany Incheon, Korea Incheon, Korea 2018 QSAI Award of Excellence Air China - Top Ten Best Caterers Hong Kong Airlines - - Caterer of the Year Hong Kong Airlines - Bronze Award, Travel Plus Award for the Americas - Nomination Guangzhou, China Best Longhaul Caterer 39 Anchorage, USA Caterer of the Year 2017 (Tier 2) (First Class Male Kit Jacob Jensen) Buenos Aires, Argentina Air China - Top Ten Best Caterers Los Angeles, USA 40 - Best Delay Bangkok, Thailand SPIRIANT 2018 QSAI Award of Excellence for Malpensa, Italy iF Design Award for the Lufthansa Performance 2017 Hong Kong Airlines - Merit Winner Travel Plus Award Europe, the Middle East and Africa - - Best Performance First Class Dining Experience Mexico City, Mexico Award, Caterer of the Year 2017 (Tier 3) Private Jet Kit (Privat Air) Nomination on Long-Haul routes SPIRIANT American Airlines - Best FAC Auckland, New Zealand SPIRIANT Brussels, Belgium Rome, Italy - Best Caterer in 2018 Improvemen HUB - Meal and Operation Travel Plus Award American Airlines - Bilen Aviation VIP Services - Istanbul, Turkey Dallas, USA Quality Award (mid-haul routes) (Supplier of the Year Amenity Kits) Transcon Culinary Support Best Service Award Pax International Readership Awards American Airlines - Above Vancouver, Canada SPIRIANT

2018Miami, USA Istanbul, Turkey “Best Caterer in Europe“ ANNUAL REVIEW 2018 and Beyond Award Lufthansa - Traffic Light Report 2017, - Best Caterer Award American Airlines - British Retail Consortium - LSG Sky Chefs Dallas, USA Silver Award Cosmo (Japan) Transcon Culinary Support Global Standard in Food Safety R-Kioski - “Snack Partner of the Year” ANA - The Best Quality Airport in Group C Incheon, Korea Sky Airline - Los Angeles, USA Santiago de Chile Evertaste, Finland Vancouver, Canada Lufthansa - Award for Quality and Customer Care ‘Silver Medal’ LSG GROUP American Airlines - - Thank you Starbucks - Star Supplier Quality ANA - Certificate of Appreciation Operational Excellence Santiago de Chile, Chile Superior Equipment Management for Services and Quality in 2018 Qingdao, China Yangon, Myanmar Buenos Aires, Argentina Virgin America - Tampa, USA Antalya, Turkey Travel Plus Award for Best Children’s Asiana Airlines - Best Onboard Hospitality Awards (Best Small Kitchen of the Year American Airlines - German Design Award for Lufthansa‘s Goody Bag < 6 years Improvement of 2017 Onboard Technology – SkyTrack) Las Vegas, USA Best Delay Performance non-hub New Economy Class Concept SPIRIANT Saipan, Micronesia SPIRIANT/ SkylogistiX Virgin America - Tampa, USA SPIRIANT Travel Plus Award for Cape Town Airport Safety Award Onboard Hospitality Awards (Highly Large Kitchen of the Year American Airlines - German Design Award Special Best Innovative Amenity Kit Cape Town, South Africa Commended – Connect Box) Los Angeles, USA Best Delay Performance hub Mention for The Wine Cooler Set SPIRIANT Cathay Pacific - Silver Award SPIRIANT Phoenix, USA SPIRIANT - Best Caterer Long Haul and Pax International Readership Awards Air China - Best Service 2018 Award Hawaiian Airlines - Gold Safety Excellence Award Ultra Long-Haul Flights (Best First/ Buiness Class Amenities Frankfurt, Germany International Kitchen of the Year 2018 Hong Kong, China Rome, Italy (Europe) Narita, Japan SPIRIANT outlookOUTLOOK Building on the multiple opportunities digitization offers for future growth.

Economic forecasts In Europe, the looming Brexit, as well as new setup will allow the company to insufficient airport infrastructure are also react quicker to market changes. At the predict more strong worrisome. same time, the digital agenda of the LSG Group will continue to unfold and growth in the The degree of consolidation is expected change the business model from an 41 to increase across all aviation segments, overall perspective. On the one hand, 42 industries that the including onboard services, where the the ongoing standardization of the three top players currently serve almost company’s process landscape will build LSG Group serves – 50 percent of the global market. a solid foundation for the digitization of front and backend processes in airlines, train Within this market environment, the LSG operations and administration. This will Group will further transform its business lead to higher efficiency and consistency operators and model to meet future customer needs throughout the global network and

ANNUAL REVIEW 2018 and evolve into an agile, flexible and boost the company’s performance to convenience-retail process-oriented global organization. the next level. On the other hand, the In doing so, it will exploit the seemingly development of smart applications unlimited possibilities of digitization. and interfaces will complement the

LSG GROUP stores. company’s existing proprietary retail The transformation of the operations platform with features that will help At the same time, however, concerns model in Europe will continue with to further personalize and enhance are being raised regarding the impact of the establishment of two regional the experience of both travelers and potential trade barriers on the world's production centers (RPCs) in the consumers. economy. The aviation industry, in Czech Republic (East) and in Western particular, has historically undergone Germany (West) as two important For 2019, the LSG Group expects economic cycles of eight to 10 years, pillars of a future network-oriented revenues on the previous year’s level which raises fears of a downward trend production approach. While the RPC and an Adjusted EBIT margin in the in that sector. Risk factors include East will already start operations in range of two to four percent. the worldwide shortage of aircraft 2019, the opening of the RPC West is maintenance technicians and pilots. planned for the summer of 2020. This Adjusted EBIT EBIT Investment Result Profit/loss from operatingactivities Total operatingexpenses Other operatingexpenses Depreciation andamortization Staff costs Cost ofmaterialsandservices Total operatingincome Other operatingincome(includingchangesininventories) Revenue CONSOLIDATED INCOMESTATEMENT FOR THE FINANCIAL YEAR 2018 − 1,217,666 − 1,384,782 − 539,765 − 71,191 78,319 2018 k € − 3,213,404 3,295,011 3,216,692 114,850 110,142 28,535 81,607 2018 k € − 3,266,892 − 1,220,614 − 1,395,514 3,280,371 3,218,895 − 561,187 − 89,577 66,218 45,346 31,867 13,479 61,476 2017 k € 44 43

LSG GROUP ANNUAL REVIEW 2018 KEY FIGURES LSG Group ︲ Global Communications ︲ Dornhofstraße 38 ︲ 63263 Neu-Isenburg ︲ Germany Phone +49 (0)6102 240-880 ︲ Fax +49 (0)6102 240-885 ︲ [email protected] ︲ www.lsg-group.com